You\’ve probably noticed that some drivers pay more than other drivers even if they drive the same model and year car. Most likely, you\’ve noticed that the young pay higher premiums than the older, men then women. That even when sex and age are the same, there are huge discrepancies. And, you’ve probably said there must be something in the driving history of one person that’s not in the other person’s history. And, sometimes, you’d be right. Which means, it’s a lot more complicated.

Insurance companies look at a lot of statistics, then they look at which statistics apply to which driver. Basically, they\’re looking to see which group, statistically, has the highest chance of making a claim, which has the second, the third, and so on.

They\’ve noticed that men tend to have more driving accidents then women. That younger people, especially the under 25-year olds, tend to have accidents more often than older people. Single drivers tend to be more reckless than married ones. People who\’ve bent or broken the law once might do it again more often than those who\’ve never done so, and end up in an accident. People who drive more tend to have more accidents than those who drive less.

Then they look at the type of car you drive. Here\’s a combination of statistics and other factors. Statistically, smaller cars tend to cost insurers more than bigger cars (they\’re just not as safe, partially because there are bigger cars out there). Some cars tend to cost them more because the parts are expensive, older cars cost less. Some cars are stolen more often than others. Cars in some neighborhoods have greater chances of being stolen or vandalized.

When they\’re done looking at all that stuff, they have a basis to judge how much to charge you for. Basically, they guess how much they\’re going to have to pay in the coming year for the whole group you belong to, add their other costs, the profits they want to make, and then figure out how much they need to charge each individual in your group so they get all their pay outs, costs, and profit.

Some things you don\’t control (you can\’t just become a middle-aged woman just to get a lower premium and you can\’t stop people all the vandalism and auto theft). However, a lot of the things they use to figure out how much premium to charge you are under your control. You do control: